TreeSweet Companies Declare Debt of $85 Million

The TreeSweet companies, a 50-year-old juice producer, has been caught in a squeeze and filed for bankruptcy with debts of about $85 million.

Los Angeles-based Early Industries is negotiating to buy all the assets of the four TreeSweet companies for $27.7 million, about $20 million of which will be cash, a TreeSweet attorney said Monday.

Early’s purchase should mean no further layoffs at TreeSweet’s three offices: a Santa Ana processing and packaging plant that employs about 99 people; a smaller plant in Winterhaven, Fla.; and the corporate headquarters in Houston, said Scott MacDonald, TreeSweet’s chief financial officer.

“It’s anticipated that there will be no layoffs and operations will continue . . . and be even more profitable than they have been in the past,� said Marc Beilinson, an attorney with Los Angeles’ Buchalter, Nemer, Fields & Younger, which represents TreeSweet in the bankruptcy.

During the first half of 1987, the company trimmed its work force by about 150 down to the current 300--including an undisclosed number in Orange County.

Privately owned TreeSweet produces and packages orange juice, varied citrus drinks, plus the Awake and Orange Plus soft drinks. It has four divisions--TreeSweet Products Co., TreeSweet Corp., TreeSweet Marketing Co., and TreeSweet Specialty Beverage. All filed Jan. 19 for protection from creditors under a Chapter 11 petition in U.S. Bankruptcy Court in Santa Ana.

In 1985, Texas investors Clinton E. Owens and E. Trine Starnes bought the TreeSweet companies in a leveraged buyout from General Foods and San Francisco-based Di Giorgio Corp. Business soon started to sour.

Competition in the frozen concentrate business has become fierce in recent years, MacDonald said Monday. Industry observers also blame a plan to branch out into six low-calorie juice beverages marketed as TreeSweet Lite.

In 1986, sales of TreeSweet’s frozen orange juice plunged to about $10 million, from $18 million to $20 million in 1985, MacDonald said.

To reduce operating losses, TreeSweet pared its staff throughout the first half of last year.

TreeSweet finished 1987 with revenues of about $70 million and an undisclosed net loss. But according to MacDonald, operating losses were “relatively insignificant� during the second half of last year.

Bankruptcy papers reveal that TreeSweet has two major secured creditors: Di Giorgio Corp., which is owed about $32 million, and the Bank of American Natural Trust & Savings Assn., which is owed about $27 million.

But under a reorganization that has been negotiated with a group of its creditors for the past 11 months, TreeSweet would pay unsecured creditors about 15 cents on the dollar. Di Giorgio would be paid cash of about $3.9 million, a note of $2.5 million, plus more interest and fees based on pretax profits. Bank of America would receive $6.3 million in cash, a note of $700,000, plus interest based on pretax profits.

Early Industries would buy TreeSweet’s assets. Early, which is involved in a number of consumer products, including rice and wine, is just entering the juice business and is acquiring some juice assets from Kraft, MacDonald said.

TreeSweet must now propose a disclosure statement to creditors. At the soonest, Early Industries will buy TreeSweet by late April, Beilinson said.